The internal audit It is the activity in charge of analyzing and evaluating the risk management, control and direction processes of a company. The scope of the internal audit is defined exclusively by management or the board of directors, to whom the auditor directly reports the results obtained..
Its ultimate goal is to add value and optimize the operations of a company. To achieve this, the audit plans, executes, analyzes and evaluates control actions in any department of the organization, all perfectly framed within the current legal regulations.
Internal audit is a consensual procedure. Although management and the auditor prepare the annual plan, information on the details of the audit to be performed must be communicated in advance to the auditee, in order to reach agreements regarding the scheduled planning..
It is vitally important to follow up on the findings found, the alert points and the proposed suggestions, since not only will the success of the audit depend on this, but the scope of the goal: to achieve maximum effectiveness in the different operations..
A structuring of the tentative dates to carry out the internal audit must be carried out, in conjunction with the company's management.
They can be carried out at different times of the year, the important thing is that at the end all the processes have been carried out.
All internal audits must operate in an environment of professionalism and respect. Findings that are found, whether positive or not, should be discussed with the auditee before recording..
Auditors must have knowledge of the procedures for auditing and understand the processes being audited. In addition, they must be objective and impartial..
An audit is not an impromptu process. This involves an exhaustive investigation of the entire process to be audited, ranging from reviewing the previous problems you have presented to developing a checklist that will guide the act..
All audits must be based on the law, standards and rules of ethics.
A closing meeting with the auditee is essential. In this meeting, the auditor should point out the possible weaknesses and areas that need to be improved..
All information, including points of disagreement, positive areas, and areas for improvement, should be recorded and communicated to auditees and management.
On the other hand, the auditor is responsible for ensuring that corrective measures have been taken to solve the problems found during the audit..
Internal audit serves various purposes within the organization, but its main objectives include:
- Help protect company assets by valuing and verifying assets.
- Evaluate the financial statements prepared by the accounting staff, in order to verify the effectiveness of the administrative system, control errors and detect possible fraud.
- Collaborate with management in identifying and prioritizing those areas or processes that require greater attention, due to being at risk.
- Carry out tests on the internal control instruments, in order to identify procedural gaps in these.
- Promote the efficient and effective use of company resources.
- Identify possible risk situations, concerns or future opportunities, providing management with professional advice on possible actions in each case.
- Propose suggestions, new ideas or conduct a special investigation on the internal accounts of the company.
- Determine the responsibility of the employees in the event of any anomalous situation detected in the audit.
- Support the management of the external auditor through the audit report, which must be carried out under the established parameters, rules and standards.
- Guarantee compliance with laws and regulations, both internal and national and international..
One of its great advantages is that it enables deficiencies to be identified and remedied in a timely manner, before they are detected by external, regulatory or compliance audits..
Despite the existence of an audit plan, management can request a general internal audit or a specific department at any time.
Because financial information is regularly requested for evaluation and analysis, accounting staff must work hard to keep these records up to date..
The organization's accounts are audited frequently, minimizing the possibility of internal fraud.
Considering the information, decisions will be made regarding increasing the effectiveness and efficiency of these procedures..
As the audit is a continuous and programmed process, it makes it possible to follow up on the new policies designed, in order to evaluate possible restructuring thereof..
The report produced by the internal audit will give the opportunity, if necessary, to make changes in the structural organization chart of the company, taking into consideration that it is vitally important that all personnel work according to excellence..
The audit is based on the evaluation of the information provided by management. It becomes difficult for the auditor to verify each of the accounting data.
If these data are altered, the final report of the internal audit will not be attached to reality, and any fraud committed may be ignored.
Each company has its own parameters to be evaluated within the audit. The aspects of how to measure and based on what to do it, its productivity or effectiveness, will be the foundation to structure the objectives and goals that are pursued with the internal audit of the company..
The internal audit may not reveal true and reliable information about the company. This would be associated with several factors.
If staff feel evaluated, they can hide failures they have incurred, which, no matter how small, would alter the results of the final report.
Another aspect is that the persons in charge of conducting the internal audit could use it as a means of power, exercising it towards those in charge of issuing the information..
On the other hand, if the information provided is correct but is not interpreted objectively, it will lose all validity..
In order for the data provided by the internal audit to be valid before shareholders, banks and other entities, the company must carry out an external audit, which implies additional costs as it has to hire auditors to carry it out..
Yet No Comments